CHEUNG CHI KWONG v. THE INCORPORATED OWNERS OF MEI KING MANSION (Stage 1)

LDBM 18 of 2006

IN THE LANDS TRIBUNAL OF T HE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT Application No. 18 of 2006

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JUDGMENT

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1.  In October 2005, the Applicant purchased a ground floor shop and let it to a restaurant operator. Shortly after the tenant had moved in and after some minor renovation/decoration work was undertaken, the underground drainage or sewage system or both became blocked. This resulted in overflowing of sewage flooding the shop.  The Applicant alleged that the flooding was caused by the breach of statutory duty under the Building Management Ordinance ( “the Ordinance”) on the part of the Respondent owners incorporation. The tenant has intimated that it would claim against the Applicant and the Respondent for damages, though no legal proceedings have yet been initiated against either. The Respondent is bringing the present proceedings claiming, inter alia, for an declaration that the Respondent is liable to indemnify him against costs and damages in respect of his tenant’s claim.

Inappropreiate reliefs pleaded by the Applicant

2.  The first reliefs pleaded is: an order for the enforcement of the provisions of the Building Management Ordinance, Cap 344.  Not only no one would understand what relief was intended by these words, these words serve no other useful purpose and should not be included in the pleadings.

3.  The second relief pleaded is no better than the first. Its wording reads: a declaration that the Respondent is under a duty to maintain the drainage pipe or pipes and/or drainage system of the Building in accordance with the Building Management Ordinance

4.  The subject-matter is unclear. Paragraph 8 of the Notice of Application alleged that the main drainage pipe of pipes of the Building has/have been clogged. This is the only reference to drainage pipes or the like.  It is not clear what specific pipes, sewers, or drains the Respondent is supposed to maintain.

5.  The Applicant produced a letter of Food and Environmental Hygiene Department.  This letter referred generally to the drains of the building. From the evidence called by the Respondent, it can be discerned that two types of pipes were mentioned. One type, whether drain pipes or sewage pipes, are definitely common facilities. The other type only serves the individual shops and the duty to maintain these pipes falls squarely on the owners of these shops : So John V Lau Hon Man & Ors [1993] 2 HKC 356and Wong Lai Kai V Incorporated Owners of Lok Fui Building, Yuen Long [2003] 3 HKC 633    

6.  It emerged at the trial that Mr. Kwok, counsel for the Applicant, did not argue for or against the distinction between these two types of pipes. He was content to focus on the general duty of Respondent to maintain these particular common facilities, namely the drainage and sewage systems of the building, whatever pipes they might consist of.  Be that as it may, the declaration sought is nothing but the tautology of the relevant provisions of the Ordinance.  That being the case the declaration sought is obviously inappropriate and would not be granted if pursued.

7.  Neither in the opening nor in the closing submission, did Mr. Kwok  mention these two reliefs, quite rightly and wisely so.

Mandatory injunction

8.  The third relief pleaded is for an mandatory injunction in the following terms: “ that the Respondent whether by itself, its servants, agents or otherwise howsoever do forthwith carry (out) the remedial works in respect of the drainage pipe or pipes of the building.”  Again this relief is not alluded to in Mr. Kwok’s submissions. I take it that he must have abandoned.  If he has not, I would have expected him to identify the drainage pipes and work out a better wording for the injunction.

9.  Just in case I might have been misled into believing that the Applicant has abandoned his claim for mandatory injunction when in fact he has not, it is better for me to deal with the merit of this claim.

10.  By “drainage pipe or pipes of the building” the Applicant can only mean, if anything at all, the drainage system of the building and the subject-matter of the building order. The building order has been complied with. Remedial works, whatever they might be, that the Applicant by this injunction requires the Respondent to carry out have already been completed. Letter of compliance was issued in March 2006.

11.   Needless to say, this injunction will not be granted under these circumstances. Not only that, I am of the view that the Applicant has not shown any justification to include this claim for injunction in his Notice of Application. It is trite law that the Applicant must show that but for the injunction by the Tribunal the Respondent would not have carried out the remedial work. However in the instant case, the Applicant at the time of filing his claim in this Tribunal had full knowledge that the Respondent had already engaged contractors to do the remedial work in order to comply with the building order relating to the drainage system. It has not been shown that it was unreasonable for the Respondent to leave the matter to the professional contractors who were at the material time in the course of undertaking drainage work for the Respondent. The inclusion of this claim for injunction in such terms as pleaded would only burden the case with an unnecessary dispute.  Mr. Kwok argued that in another context that the engagement of contractors should have been made much earlier. Be that as it may, the injunction cannot turn the clock back. It is my ruling the claim for this injunction would have failed just the same if not abandoned.

Claim for damages and declaration for indemnity

12.   The remaining reliefs sought by the Applicant are for damages and for an declaration of indemnity. These claims were fervently argued by Mr. Kwok.

13.  Liability and legal basis----The legal basis for his claim is pleaded in paragraphs 1 and 2 of the Notice of Application. Section 18 of the Ordinance imposes a the duty of the Respondent to maintain the drainage systems in so far as they are common facilities or common parts of the building and that the Respondent has been in breach of its duty. In his closing submission, Mr.Kwok also cited Clause 9(d) of the deed of mutual covenants in support of his case. Clause 9 provides that:

 “Each of the parties hereto hereby covenants with the other parties---not to do or cause or suffer or permit to be done anything in any part of the said Building in common use which may be a nuisance or cause annoyance to the occupiers of the said Building or any of them.”

The parties referred to were the three owners at the time. Together they own the entire building.   As all present owners have derived their respective title from one or more of these three owners, they must therefore be bound by this provision. This provision only serves to restrict individual owners in exercising his right of enjoyment and use of common parts of the building. It cannot be of any assistance to the Applicant’s case.

14.  Status and breach of duty of an owners incorporation--- An owners incorporation is not in every sense equivalent to a statutory public body. Its status and function must be taken into consideration in deciding the extent of its duty, the breach of the duty, and cause of action arising from the breach. Mr. Lam, counsel for the Respondent cited two cases of this Tribunal to illustrate his point. ( The Incorporated Owners of Green Villas V Wong Sui Fung LDBM 321 of 2000; and Pun Kwok Kei V The Incorporated Owners of Merit Industrial Centre and another LDBM 25 of 2003) 

15.  Right of Owners Incorporation to manage the common parts in the manner as it see fit/and its restrictions ---An owners incorporation acts on behalf of all the owners, exercising their rights, powers, privileges and duties of the owners in relation to the common parts of the building: section 16 and section 18 of the Ordinance. Its powers and duties shall be exercised and performed on its behalf by the management committee: section 29 of the Ordinance. However its decision in relation to the control and management of the common parts is subject to the resolutions of owners meeting or corporation meeting: section 14 of the Ordinance. This section provides that:

“ Subject to this Ordinance, at a meeting of a corporation any resolution may be passed with respect to the control, management, and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the management committee and all the owners.”  

On the one hand the owners incorporation through its management committee is under a duty to maintain the common parts and on the other a resolution at a corporation meeting (owners meeting) can override the decision of the management committee.  To reconcile the apparent conflict, the intent of the Ordinance is clear. The will and freedom of the owners to manage their own property is respected and reserved. Such will and freedom is effected by the majority rule. Individual owners who are oppressed by the majority decision can challenge the validity of the resolution and have it overturned in court but otherwise they are bound by the resolution.  Indeed it is to the benefit of the owners of the building to have such right to manage the building the way they chose, subject to the overriding principle that the minority of the owners are not oppressed. For instance the owners (by a resolution at a owners meeting/corporation meeting) might decide and should have so decide not to maintain the building in view of the imminent compulsory acquisition by the government, or the costs of renovation far exceeds the benefit that could have conferred on the building.

16.  Applicant’s own view---From his evidence and the evidence of his wife, it emerged clearly they did not have sufficient regard to the fact that the Respondent represents all the owners including the Applicant himself. They were not happy and felt offended that the caretaker was not able to contact the chairman for them. They stressed the fact they had paid their contributions to the drainage work shortly after the Applicant became the owner. In short they gave me an impression that the Respondent was a service contractor rather than their representative.  

17.  Argument of the Applicant’s---Mr. Kwok ‘s arguments are simple enough. They run as follows.  Water overflowing from the drainage systems is something which should not have happened in the usual course of things.  The Respondent was under a statutory duty to maintain the same and was in possession and control of the drainage systems. The Applicant does not need to prove what caused the clogging or overflowing. The principle of  res ipsa loquitur applies. Negligence on the part of the Respondent can therefore be readily drawn.

Findings

18.  Mr. Lam stresses his defence case on evidence.  It is not in dispute that a building order was issued in 1996 requiring the Respondent to investigate into the drainage system and to effect the necessary repairs.  Contractors and consultant were engaged but the project did not start until 2005. Mr. Kwok relies on heavily on the delay of so many years before the work could commence. He said that it is incumbent on the Respondent to explain or else inference of negligence should be inferred.

19.  I note that such important allegation and ground should have been pleaded. However as Mr. Lam was content not to object to it, I allow such point to be taken. The chairman of the Respondent explained the delay. The particular geographic layout of various manholes required the co-operation of ground floor shop owners and the removal of illegal structures before work could commence. The incorporated owners could have speed up the removal of these structures although it would take quite some time. It is every body’s guess what would be the shortest possible time and at what costs. It is suffice to say the Respondent has been inefficient. The management committee members are not professional managers and they are volunteer workers in effect. The mere fact that they could have been more diligent was not evidence that the management committee was negligent. The management of the building can be as efficient as the owners desires, or as inefficient for that matter, electing appropriate committee members, passing necessary resolutions at the corporation meeting to employ a professional and efficient management company to their liking. Every thing has its price. Financial costs are always one of the, if not the only, considerations. An individual owner has no cause of complaint for the standard of management they chooses or permits. 

20.  The Applicant must prove the causation between delay and the clogging, and overflowing and he has failed to do.  The Applicant made his first complaint in December 2005. By the time the drainage work had already begun and was near completion, if not already finished. The Applicant has not called any expert evidence and dismissed the evidence of the experts called by the Respondent.

21.   The shop premises had been used to operate a restaurant before the Applicant purchased it. There were problems with oil filters and  the drainage systems within the premises were altered. These together with the site inspection of drains and other information he received, he made his analysis and drew his conclusion. I accept his evidence and opinion. The overflowing of sewage water into the shop is not caused by the defects of the drainage system.

Quantum of damages

22.  Special damages amounting $31,256.31 are pleaded in paragraph 14 of the Notice of Application. They consist of loss two months’ rentals. This I understand. However the payments of government rent and rates are also claimed. According to the tenancy agreement it is the Applicant’s obligation, not the tenant’s, to pay. That being the case, the Applicant has to incur these expenses in any case. The government rent and rates should not have been included in the pleading. I should have been told this glaring mistake at the trial.

Order for indemnity

23.  It is more desirable for the Applicant to wait for his tenant to sue him and then join the Respondent as a third party. In that event, the dispute between the three parties would be determined at one trial avoiding all undesirable consequences of multiplicity of proceedings. Mr. Kwok urged me to make an assessment or a declaration for indemnity.

24.  Mr. Kwok called evidence of the damages suffered by the tenant. If I were to made such assessment, I had to make a finding on the evidence of the tenant.  It would serve no useful purpose to later proceedings, if the tenant does not accept my finding which he is entitled so to do as he is not a party to these proceedings. Further there is another complication, namely whether the Applicant is accepting the veracity of the tenant, a witness he has called. When the tenant indicated he might accept a certain amount of compensation, I invited Mr. Kwok to take instructions if such amount would be acceptable to the Applicant. He stood very firm and refused to take instructions from the Applicant who was still in court. I presume he must have foreseen this and has already taken instructions in this respect.

25.  In a similar situation, the plaintiff is quite entitled to ask for an indemnity for damages in the amount reached in compromise between him and the third party. The court would grant such indemnity or award the same amount as damages, if already paid to the third party, provided that it is a reasonable comprise.

26.   Now that the Applicant through his counsel rejected the opportunity to reach a compromise for me to rule on its reasonableness, the complication I have referred to earlier on remains.   The Applicant put forward his tenant, and presumably urged me to accept his evidence. At the same time he would not consider the quantum the tenant made out in court was reasonable. I am really amazed that Mr. Kwok was not deterred by the embarrassing position the Applicant had put him in when he urged me to accept the tenant’s estimate of quantum of damages. I do not think it is appropriate for me to assess the damages of the tenant under these circumstances even if I were to find for the Applicant.

Declaration of indemnity

27.  The basis for claiming special damages, i.e. loss of rental and declaration for indemnity is that the Applicant is liable to the tenant for the same amount. Only one basis of liability is put forward. I need not go beyond that. The basis is that the Applicant is guilty of interfering with the quiet enjoyment of the tenant. With respect to counsel, the authorities cited in support do not deal with the fundamental point.  The Applicant has not done any anything or omitted to do anything to interfere with the quiet enjoyment of the tenant.  The Applicant cannot be made liable to the tenant on that ground.

Conclusion

28.  The claim against the Respondent must fail. The Applicant has not suffered any damages as alleged. I give judgment for the Respondent with costs in his favour to be taxed on High Court Scale with Certificate for Counsel. Application to vary cost order must be made within 4 weeks.